Death of new Boat sales in Canada

earl1z19

Looks like the Canadians may have found a way to kill new boat sales along with high end cars and planes. The up side is that used boat values just went up!
This is from a Powerboat Tv post to Facebook.

Is a new yacht, sports car or private jet in your shopping plans for 2021? The new luxury tax announced in yesterday's federal Canadian budget kicks in on January 1, 2022. According to the Financial Post, "The new tax kicks...applies to sales of luxury cars and personal aircraft with a retail sales price over $100,000, and boats, with a price over $250,000. The tax will be calculated at the lesser of 20 per cent of the value above those thresholds, or 10 per cent of the full value of the luxury car, boat, or personal aircraft.

LaRea

So if you buy a new boat for $500k, your tax is $250k * 20% = $50k.  How does that compare to the current tax structure?

earl1z19

I did a quick look and it seems the current rate is about 13 percent.   I guess the question I have is this new tax replacing the old tax or in addition to it?

Handymans342

Who is buying a 250K boat? If you can afford that you can afford the tax

mattie

Pretty sure the luxury tax in 2022 will be in addition to the existing 13% HST sales tax.

Put it this way - CDN dealers will have a banner year this year on high-end boats. If they can fulfill the orders.

High end cars & boats. What a weirdly specific tax grab.

earl1z19

I did read an article about it and the explanation was to tax those who have done well during the pandemic to help those who have not.

mattie

earl1z19 said:

I did read an article about it and the explanation was to tax those who have done well during the pandemic to help those who have not.

Kinda like Robin Hood. Except gov't driven. 
They are also imposing a 1% annual tax on real estate owned outside of Canada.

earl1z19

Handymans342 said:

Who is buying a 250K boat? If you can afford that you can afford the tax

Its not if you can afford the tax or not 
 its the fact that they are hitting you for another 20%.

Handymans342

earl1z19 said:

Handymans342 said:

Who is buying a 250K boat? If you can afford that you can afford the tax

Its not if you can afford the tax or not 
 its the fact that they are hitting you for another 20%.

Ok so if you can afford a 250K boat you can afford 33% tax if you choose to pay it. What’s the tax on a used boat up there? 6% here in Florida

earl1z19

 Handy ,Still missing the point

Liberty44140

Does this hit new and used? Does Canada have sales tax like we do? My home county is 8% sales tax (new or used) but the county where my dock is is only 7% and since my boat is documented I just had to pay 7% sales tax based on dock location which was painful enough....

YYZRC

13% on new or used in Ontario. If you trade and deal with a broker you pay the tax on the difference. 

Black_Diamond

“Luxury” taxes just don’t work. Except to kill sales. lol. US had this law for many years, the RV and boating industry took huge hits, got rid of it and presto sales were back
up (in good times).  Politicians hoping for more tax dollars bit in the end likely get less.  

Ian

Back when I lived in Australia 20 years ago there was a luxury vehicle tax for those over around A$55k (then) so at the time pushed an 8 series BMW to around A$200k. Now it’s 33% for over A$77.5k and a 520i is A$109k starting. They don’t have an issue selling them.....

earl1z19

You can't tax your way into prosperity, never works

LaRea

Seems like taxes on jets and big boats are mostly symbolic because so few are sold, but maybe I'm wrong.  

PickleRick

So, out of curiosity, in Canada can you take your vessel off shore and register it in the Bahamas and have it coast guard documented?  Or is that just a USA loop hole for taxes/registration?  

69fastback

Sounds about par for the course for canadia. Land of unreasonable taxes!  But hey.....you get that healthcare 😑

YYZRC

If you use your boat in the US you don’t have to pay sales taxes in Canada. But the minute you cross the border...

lots of Quebec residents have boats on Lake Champlain sales tax free. 

Willhound

I get @earl1z19 's point about more taxes. But let's face it, the average joe isn't affected by it and most of those I've talked to support it. If you have to have that quarter of a million dollar boat, pay the tax. Commercial registrations are exempt by the way, so anybody trying to earn a living like commercial fisheries are exempt. 

YYZRC

The boat tax is fine, but a nice pick-up truck is $100k CAD. I think the “luxury vehicle” threshold is a bit low. 

Liberty44140

Completely disagree with the assumption/generalization that if you can buy a $250k boat, $50k in tax should be no problem. $50k in tax on what could be a 15 year old boat is just plain stupid. I love Canada, main driver for getting vaccinated is the hope to go there this summer, but that is just stupid.
If you are buying a $250k boat and a $50k engine repower would bankrupt you, well then yes that's a problem. You should never buy a boat if an unexpected repower would bankrupt you. But a 20% tax whether its $250k, $500k, $1M, etc.... is just (now for the third time).... stupid regardless if your financial situation. Sorry.

earl1z19

Liberty44140 said:

Completely disagree with the assumption/generalization that if you can buy a $250k boat, $50k in tax should be no problem. $50k in tax on what could be a 15 year old boat is just plain stupid. I love Canada, main driver for getting vaccinated is the hope to go there this summer, but that is just stupid.
If you are buying a $250k boat and a $50k engine repower would bankrupt you, well then yes that's a problem. You should never buy a boat if an unexpected repower would bankrupt you. But a 20% tax whether its $250k, $500k, $1M, etc.... is just (now for the third time).... stupid regardless if your financial situation. Sorry.

I agree.  Its easy to say that the additional tax is no big deal when its not your money but what if they put that extra 20% tax on something that is more common like a home sale, or a Trailer or RV sale? Probably be more of an issue I would think at that point.

YYZRC

The province of BC has a luxury sales tax of 20% on cars over $150k. You also have to pay federal sales tax of 5% (the 5% is a tax on a tax!). 

Handymans342

So Canada is a socialist country

YYZRC

Yep but we pretend not to be. 

[Deleted User]

George H.W. Bush sign a luxury tax bill that about killed the U.S. pleasure boat market during his presidency. What is flawed with the concept of a "luxury tax" targeting "rich people" is it also hurts working stiffs of modest income who scrimp and save their whole life to buy their dream boat. Andy

Liberty44140

andyd said:

George H.W. Bush sign a luxury tax bill that about killed the U.S. pleasure boat market during his presidency. What is flawed with the concept of a "luxury tax" targeting "rich people" is it also hurts working stiffs of modest income who scrimp and save their whole life to buy their dream boat. Andy

Also hurts all the people working the plants that make luxury items, their suppliers, etc....

randy56

Also hurts all the worker's building luxury item's for rich folk. As slow production.

Aqua_Aura

Me 3 also hurts all the workers and supply chains that support all of it. 

YYZRC

Tax kicks in on September 1. It is also a tax on a tax, so for example:

$200,000 car/boat

Old calculation (Ontario): $200,000 + 13% HST = $226,000

New calculation (Ontario): $200,000 + 10% luxury tax = $220,000 + 13% HST = $248,600

Yay…